Traders yet to import any gold despite taking Bangladesh Bank licence

HM Murtuza |
Published at 12:16am on February 18, 2020

A file photo shows gold bars. No gold trader is yet to express interest to import gold from international markets through legal channel after two and a half months of receiving licences from the Bangladesh Bank for importing the precious metal. — Reuters photo

No gold trader is yet to express interest to import gold from international markets through legal channel after two and a half months of receiving licences from the Bangladesh Bank for importing the precious metal.

Officials of the central bank said that they were yet to receive any application for the import of gold bars from the gold dealer licensees.

On December 2 last year, the BB issued licences to 18 entities including one bank to import gold bar with a view to bringing an end to the grey market dependent gold business in the country.

Jewellers, however, said that high tax rate was the main reason for the gold dealer licensees’ reluctance to import through the formal channel.

They said that the high tax rate had remained as a major impediment to making gold import viable for the licensees.

Unless the tax policy is made favourable for the businesses, the issuance of licences would bring no result for the country, they said.

As per the existing taxation policy, import of a bhari (11.664 grams) of gold is subject to payment of Tk 2,000 customs duty along with 15 per cent value-added tax and 5 per cent advance tax.

The price of a bhari of 22-carat gold is Tk 60,361.

‘If the tax is included, the price of imported gold would increase by up to Tk 18,000 a bhari from the existing market price,’ Bangladesh Jewellers Samity president Enamul Haque Khan told New Age on Monday.

Due to the high tax, legally imported gold would become costly against the smuggled ones or those which would be brought under the baggage rules, Enamul said, adding that the customers would also prefer purchasing gold that would be lower in price.

Considering the situation, the gold dealer licensees have no other option but to refrain from importing gold, the BAJUS president said.

Enamul said that he did not understand why such taxation rules were still in place.

In a recent proposal to the National Board of Revenue, BAJUS has requested the NBR to reduce customs duty to Tk 1,000 a bhari along with scrapping of the provision that allows bringing gold under the baggage rules.

A passenger can bring 100 grams of gold to the country without paying duty and 234 grams with paying duty under the baggage rules of the NBR.

Jewellers in January this year also requested the NBR to resolve the complexities related to VAT.

There is a 10-per cent gap in VAT as the VAT rate is 15 per cent at import stage and the rate is 5 per cent at retail stage, the businesses said.

Traders will be able to realise 5 per cent VAT from customers but there are no instruction over how traders will adjust the remaining 10 per cent VAT, they said.

In October, 2018, the cabinet approved a gold policy based on a proposal from the industries ministry and the policy allowed the central bank to formulate separate guidelines.

Although the central bank formulated the gold dealer licensing guidelines and issued licences, the issues still remained unsettled, leaving the scope unutilised.

As per the estimation of the jewellers, the country’s demand for the precious metal is around 42 tonnes or 42,000 kilograms a year.